1999 Minnesota Statutes

     65A.35 Administration. 

    Subdivision 1.    Membership.  Each insurer which is 
 authorized to write and is engaged in writing within this state, 
 on a direct basis, property or liability insurance or any 
 component thereof contained in a multiperil policy, including 
 homeowners and commercial multiperil policies, shall participate 
 in the facility, as hereinafter described, as a condition of its 
 authority to write such kinds of insurance within this state.  

    Subd. 2.    Purposes.  The purposes of the facility 
 shall be twofold, as more fully set forth in this section: 

    (1) To formulate and administer, subject to the approval of 
 the commissioner, a plan assuring fair access to insurance 
 requirements in order that no property shall be denied property 
 or liability insurance through the normal insurance market 
 provided by the private property and casualty insurance 
 industry, except after a physical inspection of such property 
 and a fair evaluation of its individual underwriting 
 characteristics; and 

    (2) To formulate and administer, subject to the approval of 
 the commissioner, a reinsurance arrangement whereby the members 
 of the facility shall share equitably the responsibility for 
 insuring property which is insurable but for which property or 
 liability insurance cannot be obtained through normal insurance 
 markets.  

    Subd. 3.    Plan of operation.  The plan of operation of 
 the facility, consistent with the provisions of sections 65A.31 
 to 65A.42 and the purpose of the facility, which shall provide 
 for the FAIR plan, the reinsurance arrangement, and the 
 economical and efficient administration of the facility, 
 including, but not limited to, management of the facility, 
 establishment of necessary facilities within this state, 
 assessment of members to defray losses and expenses, commission 
 arrangements, reasonable underwriting standards, acceptance and 
 cession of reinsurance, and procedures for determining amounts 
 of insurance to be provided.  

    The plan of operation shall be subject to approval by the 
 commissioner. 

    Subd. 4.    Amendment of the plan of operation.  The 
 facility shall, on its own initiative, subject to prior approval 
 by the commissioner, or at the direction of the commissioner, 
 amend the plan of operation.  

    Subd. 5.    Administration.  (1) The facility shall be 
 administered by a board of nine directors, five of whom are 
 elected by the members of the facility and four who represent 
 the public.  Public directors may include licensed insurance 
 agents.  Public directors are appointed by the commissioner.  At 
 least one elected director shall be a domestic stock insurer, 
 and at least one director shall be a domestic nonstock insurer.  
 In the election of directors, each member of the facility shall 
 be allotted votes bearing the same ratio to the total number of 
 votes to be cast as its degree of participation in the facility 
 bears to the total participation.  

    (2) Any vacancy among the elected directors shall be filled 
 by a vote of the other elected directors. 

    (3) If at any time the members fail to elect the required 
 number of directors to the board, or a vacancy remains unfilled 
 for more than 15 days, the commissioner may appoint the 
 directors necessary to constitute a full board of directors. 

    (4) Vacancies among directors appointed by the commissioner 
 shall be filled by appointment by the commissioner.  A person so 
 appointed serves until the end of the term of the director the 
 person is replacing.  

    (5) All directors serve for a period of two years.  The 
 terms of all directors begin on January 1 of the year their 
 appointments begin.  

    (6) The plan of operation must provide for adequate 
 compensation of directors.  A per diem amount and a procedure 
 for reimbursement of expenses incurred in the discharge of their 
 duties must be included in the plan.  Directors whose employers 
 compensate them while serving on the board or who would submit 
 their compensation to their employers are not eligible for 
 compensation under the plan. 

    Subd. 6.    Participation.  All members of the facility 
 shall participate in its expenses, losses, and equity 
 distribution in the proportion that the premiums written as 
 herein defined, but excluding that portion, if any, of premiums 
 which is attributable to the reinsurance arrangement maintained 
 by the facility, by each such member during the second preceding 
 calendar year bear to the aggregate premiums written in this 
 state by all members of the facility.  Such participation by 
 each member in the facility shall be determined annually by the 
 facility on the basis of such premiums written during the second 
 preceding calendar year as disclosed in the annual statements 
 and other reports filed by the member with the commissioner.  

    HIST: 1969 c 483 s 5; 1979 c 207 s 5; 1986 c 444; 1986 c 455 s 
 45,46; 1987 c 337 s 93; 1993 c 248 s 8